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Norway
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Two centuries of Viking raids into Europe tapered off
following the adoption of Christianity by King Olav TRYGGVASON
in 994. Conversion of the Norwegian kingdom occurred over
the next several decades. In 1397, Norway was absorbed
into a union with Denmark that lasted more than four centuries.
In 1814, Norwegians resisted the cession of their country
to Sweden and adopted a new constitution. Sweden then
invaded Norway but agreed to let Norway keep its constitution
in return for accepting the union under a Swedish king.
Rising nationalism throughout the 19th century led to
a 1905 referendum granting Norway independence. Although
Norway remained neutral in World War I, it suffered heavy
losses to its shipping. Norway proclaimed its neutrality
at the outset of World War II, but was nonetheless occupied
for five years by Nazi Germany (1940-45). In 1949, neutrality
was abandoned and Norway became a member of NATO. Discovery
of oil and gas in adjacent waters in the late 1960s boosted
Norway's economic fortunes. The current focus is on containing
spending on the extensive welfare system and planning
for the time when petroleum reserves are depleted. In
referenda held in 1972 and 1994, Norway rejected joining
the EU.
The Norwegian economy is a prosperous bastion of welfare
capitalism, featuring a combination of free market activity
and government intervention. The government controls key
areas, such as the vital petroleum sector, through large-scale
state enterprises. The country is richly endowed with
natural resources - petroleum, hydropower, fish, forests,
and minerals - and is highly dependent on the petroleum
sector, which accounts for nearly half of exports and
over 30% of state revenue. Norway is the world's third-largest
gas exporter; its position as an oil exporter has slipped
to seventh-largest as production has begun to decline.
Norway opted to stay out of the EU during a referendum
in November 1994; nonetheless, as a member of the European
Economic Area, it contributes sizably to the EU budget.
In anticipation of eventual declines in oil and gas production,
Norway saves almost all state revenue from the petroleum
sector in a sovereign wealth fund. After lackluster growth
of less than 1.5% in 2002-03, GDP growth picked up to
2.5-6.2% in 2004-07, partly due to higher oil prices.
Growth fell to 2.3% in 2008 as a result of the slowing
world economy and the drop in oil prices.
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